Retailers see sales drop in dreary November

A shopping boost on the day after Thanksgiving as consumers turned their thoughts to the holiday season couldn’t save a weak November for most retailers, fueling more concerns about a bleak December and beyond amid what could be a deep and long recession.

As merchants reported their November sales figures Thursday, disappointments cut across all sectors as shoppers worried about layoffs and shrinking retirement funds focus on necessities.

Among the beneficiaries of that was Wal-Mart Stores Inc., which posted sales results that beat Wall Street estimates and predicted that sales for established stores for the current month should be at the high end of estimates. However, Costco Wholesale Corp., usually a strong performer, reported a bigger-than expected sales decline. And mall-based stores such as teen stalwart Abercrombie & Fitch Co., Kohl’s Corp. and Macy’s Inc. fared much worse, reporting percentage declines of over 10 percent.

“It looks like Black Friday gave a modest boost so instead of sales being miserable they are just terrible,” said Ken Perkins, president of research company RetailMetrics LLC. December and beyond will prove a big challenge for retailers, he said, since there’s “no near-term catalyst to loosen purse strings.”

According to Thomson Reuters, 11 retailers beat estimates, while 12 missed expectations. The tally is based on same-store sales, or sales at stores opened at least a year, which are considered a key indicator of a retailer’s health.

Sales data from the Thanksgiving weekend showed a buying binge on Black Friday — so named because it historically was the day that a surge of shoppers pushed stores into profitability — but shoppers retreated the rest of the weekend.

And even at the stores on Friday, they focused on bargains and on small-ticket purchases as they slash their holiday budgets — meaning only modest sales gains for the weekend. The worry is that shoppers won’t return to malls until the final days before Christmas, making the typical lull between Thanksgiving weekend and the final days before Dec. 25 even more pronounced as shoppers wait for the best deals.

Many stores blamed their weak November figures in part to a quirk in the calendar — a late Thanksgiving means that the month’s reporting period does not include a whole week of post-holiday shopping compared with a year ago. Michael P. Niemira, chief economist at the International Council of Shopping Centers, estimated that factor depressed November figures — and will benefit December — by 1.5 percentage points to 2.0 percentage points.

But clearly, the deteriorating economy is wreaking havoc on consumers, who since mid-September have basically snapped their wallets shut. A big concern is layoffs, which are only expected to increase in months ahead.

A report from the Labor Department on Thursday showed that new claims for jobless benefits fell unexpectedly last week, but the number of people continuing to claim benefits reached a 26-year high.

Worries about the economy have helped Wal-Mart, which reported a 3.4 percent gain in same-store sales, surpassing the 2.1 percent increase that analysts surveyed by Thomson Reuters expected. The results excluded sales from fuel. Including fuel, sales increased 3 percent.

Wal-Mart added that business is starting to benefit from falling gas prices, noting that shopping trips increased and “customers had more discretionary income to spend.” It expects that same-store sales growth for December will be at the high end of its range of 1 to 3 percent.

Rival Target Corp., which has been stumbling as its merchandises focuses more on nonessentials like trendy clothes and housewares, posted a 10.4 percent decline. That’s worse than the 8.9 percent decline estimated by Wall Street estimates.

“Results from post-Thanksgiving holiday sales, particularly Friday, were stronger than the rest of the month, but were insufficient to offset earlier weakness,” Target Chief Executive Gregg Steinhafel said in a statement. “Our sales results continue to reflect a particularly challenging environment and consumers remain very cautious and event-driven in their purchasing behavior.”

Costco reported a 5 percent decline in same-store sales, larger than the 2.4 percent drop analysts expected. Excluding the effect of lower gas prices and currency fluctuations, the wholesale club operator would have posted a 3 percent sales gain.

Among department store operators, Macy’s Inc. reported a 13.3 percent drop in same-store sales for November, steeper than the 12.1 percent decline expected. Macy’s also reiterated that same-store sales in the fourth quarter would fall from 1 percent to 6 percent. Kohl’s posted a 17.5 percent decline in same-store sales, worse than the 16.6 drop projected.